Apple allegedly cuts costs with latest iPod nanos

Market research firm iSuppli has released production cost estimates for Apple' …

Market research firm iSuppli is at it again with the cost breakdowns of Apple products. Business Week reports the research firm took apart the new iPod nanos to draft estimates of what the gadget's parts could cost Apple, and shows that Apple did a bit of cost-cutting with its latest tiny music player.

Notably, iSuppli estimates the $149 4GB iPod nano costs $58.85 to make (a savings of $13 over the second-gen 4GB model), while costs for the 8GB model are estimated at $82.85 (allowing Apple to save over $31 over the previous 8GB model). As usual, these numbers can't account for costs that we are not privy to, such as research, software development, packaging, etc. The numbers also don't do anything to remind people that Apple's average profit margin has only risen to 36 percent since its Q3 2007 earnings call; that percentage is on the higher end of the industry average to be sure, but a far cry from people's claims of 50 percent or more.

Ultimately these cost reductions are due to competition among iPod hardware suppliers. This should bode well for the life of the device and, perhaps more importantly, the spread of flash memory throughout the rest of the industry.